by Stephen Joel Trachtenberg, President Emeritis, The George Washington University, and Gerald B. Kauvar, Research Professor of public policy and public administration, The George Washington University

Because of increased financial constraints on all State supported and most independent colleges and universities one reads and hears more and more about the wisdom of fully utilizing existing facilities in order to lower costs and expand access. Legislators and institutional leaders are climbing on the bandwagon. More and more institutions are exploring ways or exploiting existing ways to encourage students to complete their degrees rapidly. Opportunities for earning a degree in three years are being publicized and encouraged by college counselors and publicists, and media pundits.

A couple of years ago, we published an op-ed piece in the New York Times which argued for better utilization of our post-secondary institutions by using facilities on a year around basis. For many students, so doing would enlarge the possibilities to earn a degree in three years – not all students, but many students. And they would save a bit of money by foregoing any tuition increase that would become effective in the fourth year.

The op-ed piece we wrote was widely criticized, though rarely for anything we stated or implied in the article.

A lot of educators and lobbying organizations complained that our proposal would necessarily water down the value of the degree because fewer courses or credits would be required to obtain a baccalaureate degree. We proposed nothing of the kind. By offering a full slate of courses for three instead of two semesters each year, more students could be accommodated by the institution and every student would have the opportunity to take the full, existing number of course and credit requirements for graduation. There would be no need to limit access by charging more for courses in high demand, as has recently been proposed by one institution.

Many faculty members were upset by what they believed was a proposal for increasing their productivity without concomitant increases in remuneration. A careful reading of the op-ed piece should have allayed their concerns: we acknowledged the need to hire additional faculty and staff which we pointed out would be paid for by increased tuition revenue. We didn’t propose indentured servitude; we proposed a way to increase faculty and staff hiring – a jobs program, if you will.

Some readers objected that basing a three year degree on the British model was not a good idea because the British curriculum is rather different from that standard in the U.S. True enough, but not a rebuttal to an argument we advanced. We never mentioned the British model.

Others objected that students would be deprived of an opportunity for study abroad, or internships, or employment needed to pay tuition. Depending on how a year around system was implemented, each of these horribles might come to pass. But we had in mind that internships and employment and study abroad opportunities abound in the summertime – but so do the numbers of people competing for them. By encouraging people to take time off during the spring or fall, an institution could moderate the demand in the summer when places are harder to find because more people are looking for them, and increasing the supply in the fall and spring when there are similar ( and often better) opportunities but fewer people seeking them.

Still others objected that families might not be able to take vacations together or spend time together in the summer. Perhaps true, but many families could take vacations or spend time together during the spring or fall. And it ignores the fact that after the first year in college, many students spend time in places other than their parental residence, often in the city or town where they attend school. Encouraging students to take time off other than during the summer months might permit skiing vacations, or allow them to take advantage of seasonal employment opportunities when there is less competition for jobs. And they might find it easier to obtain useful and interesting internships when not everyone was looking for them.

What’s true for students is true for staff and faculty as well. Nearly all would have a choice of when to take annual leave. Some with young children might choose the summer so long as primary and secondary schools cling to less than full use of their facilities and capabilities. But others might find less crowded vacation spots and less crowded places to pursue research and avocational interests.

What worried a few people is that a good deal of socialization and maturation takes place during a young adult’s college experience, and that leadership opportunities might become scarcer. We’ve not seen any evidence that students become more mature in four years than they achieve in three, and offering an additional full semester would increase rather than decrease leadership openings. One might also question the wisdom of paying tuition for an unnecessary fourth year in the belief that an additional year college experience produces a level or kind of socialization or maturation significantly different than the world of work.

Besides, and again; we weren’t arguing or advocating a degree in three for everyone. We were pointing out the advantages of year around utilization of facilities – which has more rapid degree completion as one of its benefits.

Existing institutions that encourage degree completion in three years have found ways to mitigate most of the horribles anyone imagined or accused us of fomenting. Surely other institutions can and will learn from their example; we should neither imagine nor fear they would implement a year-around strategy without thought or study.

Our institution, George Washington University, established a joint faculty-student-staff committee to study ways to fully utilize of our facilities. The committee and a large group of subcommittees worked hard from February fifth to May nineteenth 2003, and submitted a report on June 30th. As requested, they investigated and analyzed options; they did not and were not asked to make recommendations. (Their report, with all its appendices, is still available on the University’s website. In the committee’s own words, “the report consists of facts, analysis, and a certain amount of informed rumination.”)

By way of example, the committee demonstrated that if the university required rising juniors to take a full load of course work in the summer, we could expand enrollment, access, by over 1,000 students a year with no change in class size or teaching load. After fully accounting for 38 additional full-time faculty at a cost of $4.1 million (in 2003 dollars), and instructional support costs of an additional $1.7 dollars and $.8 million in other costs, the university would have an additional net income of nearly $12 million which could be used to provide scholarship assistance or enhance the educational experience in a myriad of other ways.

A degree in three isn’t necessary for institutions to achieve full utilization of their facilities, add qualified students, hire talented faculty and staff, and reduce the need to build additional facilities. Imagination and investigation and an open mind are all that’s required; what isn’t needed is knee-jerk criticism or the demolition of straw men in the interests of maintaining the status quo.

Stephen Joel Trachtenberg is President Emeritus and University Professor of Public Service. Stephen Joel Trachtenberg served as the 15th president of The George Washington University for nearly two decades, from 1988 to August 1, 2007. He came to GW from the University of Hartford (CT), where he had been president for 11 years. Before assuming the presidency of Hartford, Trachtenberg served for eight years at Boston University as vice president for academic services and academic dean of the College of Liberal Arts. Earlier, in Washington, D.C., he was a special assistant for two years to the U.S. Education Commissioner, Department of Health, Education and Welfare. He has been an attorney with the U.S. Atomic Energy Commission and a legislative aide to former Indiana Congressman John Brademas.

Gerry Kauvar is a research professor of public policy and public administration and special assistant to the president emeritus at The George Washington University in Washington, DC. He has taught graduate and undergraduate courses in English literature, literary criticism, and public policy. He served for a quarter century in senior executive positions in the Department of Defense, and was the staff director for the White House Commission on Aviation Safety and Security. He has been a senior administrator at three universities.He received the Presidential Rank Award of meritorious executive, and several Department of Defense honors including both the DoD and Air Force medals for exceptional civil service.

There is much press and study about the returns to a higher education. I, myself, have developed and published charts and essays on the power of a postsecondary credential. However, as our readers now, I am more critical, if not skeptical, than most about the true value of a postsecondary degree in this competitive and increasingly global environment.

Without doubt, higher levels of education typically bring economic and cultural capital to individuals. The higher the education, the higher the income, as we know. The harder calculation, and one perhaps that even weighs in greater importance than the fiscal returns, is the societal or cultural piece: the placement of an individual in society and the benefits that are given and received in a complementary fashion between both individual and society.

But the financial piece cannot be ignored. And nor should it be assumed.

In August 2011, the Georgetown University Center on Education and the Workforce released The College Payoff, a review of data from the US Bureau of Labor Statistics. The report highlights the earnings of individuals by level of education, race/ethnicity, gender, and job description/title. It provides very interesting and compelling data that suggests clearly that education pays. For example, lifetime earnings of a high school diploma are $1.3 million compared to a BA return of $2.3 million and a profession degree of $3.6 million. Some of this makes perfect sense: those in occupations that require a higher level of Education, especially professions, earn more, simply by the nature of those industries. A doctor will almost always earn more than a blue collar worker unless the former makes a unique and peculiar decision to do something more specialized with his or her skillset ( e.g., work for doctors without borders and earn a low wage).

However, the other argument may suggest that many of those with advance degrees, including the BA, earn more, simply by the filtering process of our economy. Many jobs filled by people with a BA are not associated with a particular skillset. To the contrary, they are filled by BAs because employers use the BA as a filter for perceived quality. We filter by BA because we can: there are simply millions of BAs looking for jobs. Every employer will hire as high as he or she can if the supply is there. And there continues to be an abundance of BAs of working age. Who wouldn’t? People need to take note of this because this filtering process has a huge skew on the suggestion that more jobs require a BA. They don’t. It isn’t the skillset that is getting the job, but rather, the credential. And credentials do not universally equate to skills. For instance, take a look around your office. Are all the BAs alike? Or have you worked for an employer with great credentials who wasn’t half as good as you or your other colleagues? Just saying. Be very mindful of the difference between skills, credentials, and filters in our jobs market. Proponents of higher education try and use these interchangeably. They are not interchangeable.

As stated, I don’t argue that higher levels of education equates to an average mean earnings figure. But of interest for today’s conversation is the illustration in the report of the percentage of people with lower degrees than earn as much or more than those with higher degrees. This is very interesting.

For instance, did you know that 14.3 percent of people with a high school diploma earn as much or more than those with a BA? And 9.2 percent as much or higher than master’s level grads? Further, those same high school graduates earned as much or more than 30.5 percent of those with a BA or higher. Put another way, about one third of high school grads earned as much or higher than individuals that earned at least a BA. I understand this occurring to some degree, but one third?

Let’s go a little further down the education pipeline. Table 1 also shows that over one quarter (26.2 percent) of those with an associate’s degree earn as much or more than those with a BA. And get this: 61.8 percent off those with AA’s earn as much or more than those with at a BA or higher, including professionals. Wow! That’s almost two out of three AA recipients. How could this possibly be? They certainly could not possess the requisite skillset to earn more than almost two thirds of those with higher degrees, could they? Is this not against the laws of economics and supply and demand?

Apparently not, and for several reasons. First, we understand that some people will always do better than average, and some will do worse. The Table 1A clearly illustrates something that is very important to the reader: averages are just averages, and those on the outlying percentiles do much better or much lesser than average. For instance, BA recipients at the 75th percentile earn $3.4 million—over $1 million more than the average. Of course, the reverse is also true. Those at the 25th percentile earn $1.5 million, or about $800,000 less than the average BA earner. Another interesting way to look at this is across earners. Associates degree earners at the 75th percentile earn over $100,000 more than the average BA earner. And similarly, AA earners at the 25th percentile earn about $700,000 less than the average high school graduate.

All of this is to say that there is great variation in who earns what, within and across degree types. But it begs a very important question: what value is the actual degree if there is such variation? If almost two thirds of people with an earned AA earn as much or higher than those with a BA, what does that tell us about either the quality of the degrees or the skills that are acquired by those degrees? The simple fact that 61.8 percent of these earners are at pace with BA recipients suggests that perhaps the earned degree isn’t an accurate measure of readiness for the workforce. Rather, the application of skills—some gained from academic work, others from life work—is the more appropriate measure.

But we don’t do that. We simply vacate that argument and suggest that the degree is our default measure of preparedness, if not intelligence (I dare say), in American society. It would be particularly interesting to look at the variance in earnings by degree levels in countries such as Canada, Germany, and France, to name a few. My educated-but-clearly-biased-and-unknown-guess is that the variation is much smaller, with my thesis that it is larger in the US because of our filtering process for the workforce.

I think if we have more BAs as a percentage of our workforce (currently about 27 percent) our nation could be a better place. More education. More literacy. More knowledge and capacity of current and important issues. At least that is one conclusion. But this would ONLY occur if we can ensure that the academic AND social outcomes attributed to a higher education are indeed higher. As I have often argued, higher numbers of low quality does us little more than feel good. If we get our BA rate up to 35 percent and our postsecondary rate to 65 percent, that only does that nation well if the quality of those degrees (a) increases and (b) provides meaning to our future society. There is certainly nothing to suggest that this is occurring. In fact, I argue that the reserve is more likely to be true. As we continue to massify the higher education system and open access, it follows logically that quality declines. The fight for more students who are historically underrepresented in higher education, and by definition, less prepared than those who traditionally have accessed higher education, puts a downward pressure on quality teaching and learning.

This does not have to be the case, but it currently is. Our current efforts to improve compulsory education at the primary, elementary, and secondary levels does not appear to be increasing the quality of high school graduates, and certainly not the quality of high school dropouts.

So what do we do to change this? Primarily, by having a real conversation about the linkage between the workforce, skillsets, higher education, and compulsory education. Until we have a much greater knowledgebase of the linkages between these various levels of the life cycle, we will continue to imprudently use filters in our workforce that are inappropriate.

Hamilton College is a private liberal arts college based in Clinton, New York that serves 1,812 students with a cost of attendance of about $54,000. Hamilton has an endowment of exceeding $600 million, with a 27 percent acceptance rate and average SAT scores in the lower 700s. They have a four-year graduation rate of 84 percent and placed 17th on the US News and World Report top liberal arts schools, number 24 on the high school counselor rankings, and, get this, number 20 on the “best value schools.” Really.

In addition, 70 percent of the students are White, with only 5 percent Black and 5 percent Hispanic. Take away the 7 percent Asians and the 5 percent “international” students, and realistically you have a university with 1:10 diversity ratio (I don’t count Asians in this demographic). One Hamilton student wrote on the collegeprowler.com website: “We’re pretty white.” As well, only 12 percent of Hamilton students receive a Pell grant, meaning “poor,” in the federal sense.

Arguably, Hamilton is an excellent school with excellent students and excellent faculty and facilities. That isn’t up for argument. But their “cost” is over $63,000 and over 42 percent of students receive need-based aid (averaging $33,381). “Poor” students at Hamilton may come from families with seven-digit incomes. Given the diversity (or lack thereof) and high SATs, one could bet that much of this aid goes to what we would traditionally label is the higher end of middle-income earners.

Further, only 41 percent of students at Hamilton borrowed (2010) and the average debt load of the 2010 graduating class was only $16,982. Using rough calculations, if the average outstanding COA is $30,000/year, with cost of $120,000 for four years, I am surprised that only 41 percent of students borrowed only an average of $17k. To me, this likely means that most of the families were able to pay out of pocket for whatever wasn’t picked up by institutional, state, and federal financial aid. That’s significant because it tells us more about the clientele.

As with many private institutions with resources, Hamilton is able to provide excellent institutional aid. Coupled with other aid, Hamilton College may be affordable to many students who would not otherwise be able to afford a college like this.

But the example of Hamilton, and the hundreds of institutions like it, begs certain policy-related questions.

The first is simple: at what point is the “cost” (framed from an institutional point of view) so hefty that it is beyond the pale of appropriate? At what point does someone point to Hamilton and say that their delivery model of education is inefficient and out-of-line with reality? I simply can’t fathom how an institution should cost $63,000/year. Even students at Hamilton could not believe their tuition did not cover the full cost of their education. Nor can I.

This leads to this policy question: when this cost is so high, at what point should the federal government strip an institution of federal Title IV aid? While Hamilton is a private institution, it receives millions of federal financial aid. In fact, about $4 million/year. Sure, this pales to the approximately $25 million provided by Hamilton each year, but it still represents $4 million of taxpayer funds which doesn’t buy us diversity or equity to any extent.

Too many of our institutions are pushing the Chivas Regal model of charging increasingly out-of-touch tuition and fees because they can. If a college like Hamilton can charge over $50k/year and still not cover costs, I’d suggest a revolution in their management practices. Because they can charge so much, they continue to spend far too much. That’s not the message we should be driving to our institutions, because this arena holds with it a lot of penis envy: they all want to be like the Ivy’s. But they can’t. Endowments rule as these institutions, and with over $600 million for a very small school, this is nothing to brag about. This is when competition doesn’t work in the market place, because the higher education model, at least in the upper elite, is that competition raise tuition and fees, not lowers it. It does so based on perceptions and our continual fear that there is never enough and we have to pay top dollar to beat our colleagues and friends. The Higher Education Arms Race continues.

The students at Hamilton just held “Stop Day” last month, representing the day 2/3 of the way through the school year when their tuition and fee charges stop paying and other donors are footing the bill. The students send letters to donors. How nice. Of course, I would be much more impressed if these students, who, by virtue of their parents’ resources and social class are able to attend this prestigious school, would perhaps reflect on this situation (this is liberal arts, right?) and take a stand. But they don’t because they are the chosen few that luckily got into Hamilton. I understand that.

But what type of student are we molding at institutions like Hamilton? And what payback to we get, as taxpayers, for the infusion of federal financial aid?

This morning, InsideHigherEd.com reported on Indiana’s plan to double the number of college degrees by 2025, from 60,000 to 120,000. Indiana, led by Governor Mitch Daniels (George W. Bush’s former Director of the OMB), uses a performance funding approach to higher education. In 2009, Daniels signed a 6 percent budget across-the-board cut, and most of higher education was hit with that same 6 percent. However, because of the performance-funding model, institutions were hit in a disproportionate fashion based on student success indicators as a shift away from FTE funding to completion-based funding. Most certainly, many states will be moving to a similar model, because, at least on the surface, it seems viable. Why pay institutions for how many “seats” they have compared to their success in getting students graduated? The challenge, of course, is that not all colleges are equal, as not all students are equal. How do we do this with our open admissions institutions?

I’m not necessarily saying performance funding is a bad idea. It isn’t. But how it is done certainly poses a challenge. Akin to President Obama’s recent suggestion that federal and state governments need to hold institutions accountable for their actions, things bog down when specifics are thrown into the mix. These policy widgets sound good, but how do you operationalize them in a fair and equitable manner for all institutions?

Hmmm.

After reading the IHE story this morning, I came to wondering whether Indiana can do it. I am a self-professed cynic of degree rhetoric in America. I strongly believe that the discussion is less about how many and more about how “good” we educate students. We need to focus on quality, not quantity. If we can have lots of quality graduates, fab. But focusing on “lots” of mediocre seems inconsequential.

So I took off today, spending too much time looking at historical data on the issue. The table below brings data from two different NCES Digest of Education Statistics (1992 and 2010). For this comparison, I compare Indiana vs. the United States for the years 1988-89 and 2008-09. Using those data, I extrapolated to 2025-26, the year that Indiana says it will double the number of degrees conferred.

At first, I didn’t think they had a chance. How could they possibly increase two-fold in 17 years? Here’s what I found.

From 1988-89 to 2008-09, the number of degrees conferred in Indiana increased from 45,694 to 70,909. That’s an increase of 55 percent. As Adam Sandler would say, “Not too shabby.” The largest increases were in AAs, Masters, and doctoral degrees. In comparison, the number of degrees conferred in the United States only increased by 7 percent during that time period, buoyed prominently by a flat-line in the production of BAs.

Using these data, my calculations (back-of-envelope-type) suggest that Indiana COULD hit 104,818 degrees by 2025-26. That’s well under the 120,000 set by Daniels et al., but not inconsequential.

Of course, the ability of Indiana to hit its target depends largely on (a) demographic shifts; (b) public policy (e.g., increase in K-12 quality); (c) supply (e.g., how many seats?); and (d) demand. Who knows what will happen during the next 17 years? One thing for sure: college will be way more expensive (see my November 4, 2011 post), which will most definitely tamp down the demand curve.

Given these numbers and the impact of a higher and higher education, I don’t think Indiana has a shot at this. Of course, the public policy piece matters greatly: does Indiana build a vocational infrastructure to create most of these degrees in a cost-effective manner? That would make sense, because the greatest need for future jobs WILL NOT BE A BA OR HIGHER. It will be blue collar, mostly. Technicians, nurses, and people in service sectors. Contrary to recent reports, the future is not chock full of BAs and professionals. In this aging society, it is about service, health care, and food. Look at the BLS data. That’s what it says? Computers? We’ve already had that hump, but just like health care, we will always need computer programmers and ancillary workers. But BAs? Don’t drink the Kool-Aid. It isn’t there.

My biggest worry in this is that politicians, like Daniels, are pushing for more, but don’t really know why other than it polls well. Clinton did it (see TRA97; tuition tax credits). They all do it. But it doesn’t make it right. It just makes them electable.

If they really want to deal with this, let’s make sure all children can read at a high level. All of them, with minor exception for some cognitive disabilities. Then let’s give our children a world-class public education. If we do that, trust me, the “higher education” will take care of itself. That’s not really true, but it sounds good. We obviously have to dual track this issue on a policy level, but we need to start early in order to make the end game happen.

For students who are planning on going to college or university, a major complaint is the complexity of the application process. Beyond being academically prepared, going to college requires that several steps be taken in order to be considered for acceptance. This, of course, gets more complicated if you want to apply to several colleges. Even more complicated if these colleges are in different states or are private institutions.

Back in the mid-1970s, the Common Application was created by 15 institutions to try and simplify the admissions process. The logic is simple: why not have just one application that can be directed at a particular institution (or institutions) so that students (and parents) have but one form to submit.

Today, with our computer and web-based electronics, this should even be simpler. In fact, over 400 colleges, including Yale and Princeton, subscribe to “The Common App” (www.commonapp.org). This seems wonderful enough, but there are two significant issues.

First, I ask why only 456 colleges? In the US, there are over 1,800 private, four-year not-for-profit and 600 public, four-year not-for-profit institutions. In addition, there are approximately 1,100 community colleges and 600 private, two-year institutions.

My math says over 4,000 public and private two- and four-year institutions in the United States. Why are only 11 percent of colleges and universities in the Title IV system using a college app? This needs to change.

Second, of the 456 colleges that subscribe to the common app, why do so many require additional application information, and sometimes complete applications, in addition? It seems that many of the colleges that use the common app put many other admissions requirements on students that the common app becomes of little utility. They end up submitting a separate application anyway for several of these institutions.

We’ve seen this before. After the 1992 reauthorization of the Higher Education Act, Congress forced the development of the FAFSA (Free Application for Federal Student Aid) because many members did not like The College Board having a monopoly on the aid form (The College Board’s PROFILE). But even today, whereas a student must complete a FAFSA for financial aid, many colleges, most of which are private, require the PROFILE as well because it asks for additional asset information in order to calculate need. So, even though the free form is universal, many students have to complete a second aid form. This seems to be the case with the Common App, as well.

Quite simply, if we really want to simplify this chaotic system of higher education, one simple (partial) solution is for the federal government (and yes, the Canadian system should do the same!) to require all Title IV institutions (i.e., institutions that qualify for federal financial aid) to use one singular admissions form. I truly can’t believe the requirements for admission should be different for our institutions. In addition, the current Common App allows for additional questions by institutions (as long as they aren’t redundant). So why not?

This is an easy thing to do. Congress, simply create a new federal policy that requires institutions to use the Common App by 2013-14 or lose their Title IV status. You did it for financial aid (as imperfect as the FAFSA is). Do it for admissions.

As we continue to hear more about free or cheap university programs through MIT and other players, news comes from the province of Alberta of the Liberal party’s platform to reduce tuition gradually until it is free.

To do this, the Liberal Party plans on creating a Post-Secondary Education Fund which would add money and act as an interest-bearing account whose dividends would be used to further reduce the cost of higher education.

In the dream world of politics and education, this sounds good. Very good. But from a rhetoric-free perspective, it won’t happen. Why?

First, the Liberal party (but not the most “liberal” party in Canada; that’s the NDP) won’t get elected. They carry only 11 percent of public support in uber-conservative Alberta. To put this in perspective, the liberals in Alberta are akin to Democrats in Texas. Few and far between (the joke goes: Democrats in Texas are lightly painted Republicans; I guess, Liberals in Alberta are lightly painted Conservatives?, especially since their leader was a member of the Conservative Party?). Because of this placement, the Liberal Party can say whatever it wants to get traction because they never will have to enact their promises. That stated, let’s walk the wonk.

If any province “could” do a tuition free model, it would be Alberta. A very rich geo-political area due to oil sands. And it is only going to get richer once it sells its product either to the US (Keystone) or China and the Pacific Rim (which are salivating right now over the possibility). Alberta could afford a free scheme and not dent the economy.

Of course, at heart is the Alberta PSE-going mentality. Why would a young man or woman in Calgary or Edmonton, let alone Lethbridge or Red Deer, go to college or university if they can go up north to Fort McMurray, about 300 miles north of Edmonton, and make $100k/year? At 18. Yes, it is blue-collar work. Good blue collar work. Readers can see why PSE has been a tough sell, similar to what we have seen in Nevada (why study when you can live well in the gaming industry?).

But the people of Alberta also get the reality behind living in a knowledge economy and they know they need to increase the number of college graduates to keep the economy percolating along. As to do this, they need to keep in mind several fact checks.

Second, free tuition has never worked in the modern era. Ireland did it in the 1990s and now has a major catastrophe on their hands. When Ireland introduced free fees back in 1996, it did so at the crest of a technological tsunami of work. These were they days when your telephone help desk had a nice Irish lilt in his or her voice. Now it has a Mumbai dialect. The problem is that the hot Irish economy completely tanked only a few years later, leaving the government strapped to this policy they cannot retract (think third rail). No one in a fairly liberal country is going to vote in anyone who is going to remove free fees. And that’s too bad, because they can’t afford it.

That’s a potential look into the future for Alberta. Things are hot right now. One massive invention into sustainable resources and oil won’t be as hot and the economy slows. The Saudi’s are equally concerned about this, which is why they are pouring billions into higher education.

Politically, the Liberal Party plans to pay for their tuition plan by increasing taxes on the top 10 percent (and the US can’t even do the top 1 percent!!!). The plan is to increase corporate tax by 2 percent, while also raising personal taxes on those making $100-$150k by 3 percent (to 13 percent), those between $150k and $200k by 5 percent (to 15 percent), and those above $200k by 7 percent (to 17 percent). That’s a pretty hefty tax increase. Who do you think will vote for it?

Normally I would totally trash such a suggestion because it is politically unviable and isn’t necessary the most prudent policy. I give Alberta a partial pass on this because it is the ONE jurisdiction I know that could legitimately afford this and they are in dire need of a knowledge economy. The devil is in the details, and if you do have a free or reduced-fee policy, the government needs to ensure that the appropriate amount of funding flows to the PSE institutions. As we saw in Quebec, flat fees for decades just meant a starved higher education. That doesn’t work. So it isn’t just the reduction of fees (which equals lesser revenue), but the fiscal compliment of those fees to institutions so that quality doesn’t suffer. We don’t want more post-secondary graduates with poor educations, but more with better educations.

Last week, I discussed the President’s proposal for cost cutting and keeping colleges on task and on budget. Yesterday, the Senate held a hearing on college affordability that basically showed how the government is handcuffed from finding a way to get colleges in line, fiscally or otherwise.

Senate Democrats and Republicans lined up and basically sound-bited (now a verb in a dictionary near you!) what we expect. Democrats said the government should do whatever they can to make college more affordable (according to Barbara Mikulski, D-MD). Republicans said they should let free markets take care of this (it wouldn’t be so funny if we didn’t know that the Republicans took the Democrats position back in 1998. Now it’s hilarious).

But I was taken by what North Carolina Republican Richard Burr said:

“Higher education is a great example of how the market place works. When tuition gets too expensive, he said, “people choose to go somewhere else.” (InsideHigherEd.com)

I apologize, but this comment shows either naiveté or gross ignorance. I’m betting both.

First, higher education is about as far from free market as you can get. If you want free market, take away every government subsidy, from student loans, to core government funding, to federal and private research grants. Eliminate all of those, and THEN we can start talking about how this market really works. But we can’t, because most of higher education is highly subsidized by federal and state governments.

Second, when tuition gets “too” expensive, I don’t believe that most students go away, because we have conditioned them to take on massive amounts of debt that, according to Senator Mikulski, they have to take a mortgage for when there isn’t necessarily the ROI. I’ll ask the Senator to define “too” expensive, when we have national rhetoric saying that if you don’t go to college, you fail in the United States of America.

Think of this from an economic level and talk supply and demand. We have pushed the demand curve for post-secondary education so far out­—almost entirely on speculation—that the system has become completely unbalanced. We are asking for students to pay for way above market price for a return on investment that is starting to look south. This is true at public four-year institutions, and unbelievably true at private four-year institutions.

What we are doing in higher education isn’t so far off selling derivatives on Wall Street. We are telling taxpayers, or future taxpayers, that this is the risky investment you have to take, but please, don’t worry about the cost. The return on investment is phenomenal. Not a problem. Speculation, ladies and gentlemen. This type of analysis brought the current recession on.

The rhetoric is abusive on both sides. It is true that government can’t solve all these issues in higher education. Even Senator Enzi (R-WY) said that the feds should not increase student aid because it doesn’t work or at least isn’t cost effective (and he isn’t ALL that wrong; albeit a bit wrong, for sure; economists would support much of that argument). But at the same time, colleges have shown they are completely incapable of doing it themselves without some external force.

For instance, this week it was found that Claremont McKenna College admitted that they falsely report their SAT scores to the federal government and to US News and World Report. Why? So they rate better. They inflated the scores by approximately 10-20 points each so that they would go up in the rankings. Surprised? Do you think they are the only one?

Why does this matter? Because it goes to show that we can’t trust colleges, including university presidents and their boards, to do the right thing. Colleges and universities are becoming more like private corporations, where the focus is increasingly about institutional ROI, not student ROI. And that’s when the system falls down. And it is falling in a serious way.

As stated last week, I’m not sure exactly what the government does that will have any significant impact on college “costs,” but we are at that point that something has to be done. Senator Burr would love to leave the free market higher education system alone, but I’ve already said how stupid that is. But finding the balance of when government comes in? I’ll be the first to admit it’s a tough one.

It’s right of the Administration to bring this up for discussion, especially during an election year. But I, like countless others, will be interested in seeing what they really plan on doing and how they will do it. The discussion in the Senate yesterday shows that it won’t be an easy legislative path. The cynic in me says this will come and go and in another decade, when the average cost of attendance of a four-year public university is about $35,000/year (at least), maybe I’ll just pull this column up again. Let’s hope not.

This morning, President Obama used the setting of staff and students at the University of Michigan to unveil his Keeping College Affordable initiative. Based on his State of the Union speech a few nights ago, we knew this was coming and we knew mostly what it was about, and as Secretary of Education Arne Duncan said earlier this morning on MSNBC’s Morning Joe, the initiative would involve both carrots and sticks.

There are several components of the initiative, but the most salient feature is a $1 billion incentive* fund to entice institutions to keep costs down (the carrot). This program is patterned after the K-12 Race to the Top program, which has provided incentive funding to states. The “stick” is the President’s warning to institutions that if they don’t bring tuition fees within reason, Congress will act. “You can’t assume that you’ll just jack up tuition every single year. If you can’t stop tuition from going up, then the funding you get from taxpayers each year will go down.”

It is easy to be cynical about these changes. Because the US higher education system is so large and complex, attempting to make a real and positive change in this system is inordinately difficult; perhaps impossible. Understand that this “system” has over 2,000 public institutions alone, another 2,000 private, non-profits, and thousands of other proprietary institutions. The public institutions run under the auspices of 50 state governments who have the final say on what happens. But the federal government has some leverage through Title IV (student aid) and research funds. Already, Title IV aid is used as a lever to get institutions to complete IPEDs surveys each year (if institutions don’t complete, they don’t get federal student aid funds, including Pell, Direct Loans, and Work Study).

So how, exactly, will the Administration apply stated stick to the institutions? It can reduce the amount of Title IV money that an institution gets, but that, in most ways, would hurt students as much as institutions. So that doesn’t work particularly well. They could reduce research funding (i.e., if they do not comply, then no NASA, NIH, NSF, or Defense funds), which would have an impact, but only on Research I and II institutions, for the most part.

As expected, there is already critical commentary on the President’s Initiative. The President of the American Council on Education, Molly Corbett Broad, said that the President’s proposal would “move decision-making in higher education from college campuses to Washington, D.C.” Of course, ACE’s role is to protect university presidents and their institutions. Former Secretary of Education and current Senator Lamar Alexander, questioned whether these programs would end up hurting students.

The interesting piece is that Alexander’s colleague, Buck McKeon, suggested almost the same type of thing over a dozen years ago. That is the last time that Congress or the Administration threatened (yes, this is a threat by the President) the higher education establishment. So, this isn’t anything new. But nothing happened then because it because clear it would be difficult to actuate any of these proposals in a way that (a) didn’t completely usurp policy control from the states; and (b) didn’t hurt students.

Many of us—perhaps most of us—agree completely with what the President is trying to do. As he said, his goal is ensure that institutions set “responsible tuition policy,” provide a “quality education and training” to students, and ensure that “low-income students” enroll and graduate at higher rates. All of this is laudable and these should be education policy focuses for higher education. But without the states coming along for the ride, the feds will be limited in what they can do to shift hundreds of years of institutional culture. That’s where the RTTT comes in.

The President is also proposing a special “First in the World” competition ($55 million) for institutions and non-profits to develop cutting edge strategies to reduce cost and improve access and completion.

The President said that “Higher education is not a luxury. It’s an economic imperative that every family in America should be able to afford.”

He’s right. And while the Administration, through its proposals, clearly understands that this is really about the cost drivers of education and less about price, this is a difficult task to do from the federal level. In an election year, don’t expect much to happen. But let’s keep watching.

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*Incentivize still shouldn’t be a word, and it is ugly whenever someone uses it, especially a politician.

Before the Christmas break, I wrote a piece called “Higher Education for Free” (December 23, 2011). This week I am providing a “Part Deux” due to emerging news and conversations on the topic.

This week, Apple announced two important announcements. First, an expansion of their iTunes U, which provides not only courses from higher education institutions around the world, but full courses. Second, the expansion of iBooks for textbooks.

These two innovations build upon our prior news of MIT opening its course content to the masses, giving people who complete MIT online courses an option of getting full course credit for their effort.

In the past few days, critics have crawled out of the woodwork to complain how Apple will be bad for higher education. As one critic noted, this is not Apple’s humanitarian interest in expanding education to the masses, but rather, to sell more iPads. Others suggest that this will only weaken the “higher education brand” for institutions and we will continue to water down the pristine ivory towers of postsecondary education.

This past week, EPI hosted its Executive Institute on Student Success in Scottsdale, Arizona. Former Congressman and CSU-Monterey Bay Founding President Peter Smith (now of Kaplan Higher Education) discussed the potential of “badging” in higher education. This is the practice where students will essentially receive a statement of competency acquired in a particular course. This is not necessarily the same as gaining course “credit,” but it begins to eat away at the necessity of certain course work and may pave the way for redefining the structure of the higher education “degree.”

Put this in perspective from our prior discussion of MIT’s free courseware. If a student completes the MIT course in good standing, for a basic fee they can be evaluated (tests and other assessments) to document their knowledge and grasp of the course content. MIT charges $100 (or so I’ve heard) for the assessment and that’s all they get from it.

How does this make economic sense?

Think of it this way. If College A designed an introduction course in Economics, and the course is full in terms of seats, why not give away online access to their course? For content, there is no real cost to the institution for this information. Sure, other institutions could “steal” content, but almost all professors steal content to a degree. That’s how we create syllabi. We use textbooks and see what others have done at our university or others. The only thing that really costs is assessment, whether grading of papers, tests, or perhaps some other authentic style of assessment (e.g., portfolio reviews; classroom observation).

So why not just charge for these services? If the person pays a reasonable amount (let’s say $100) and they pass the assessment(s), then should they not be able to receive course credit for completion? I think so.

Of course, a student using this method would probably stumble into the arcane world of accreditation and articulation. What courses would be suitable for degree program X? This isn’t rocket science, but states have been very slow in creating decent articulation agreements around course and degree articulation from college to college; sector to sector. We see this often in transfers from community colleges to four-year institutions.

Still, the news from Apple should be applauded. More higher education. Greater access. Lower cost. In both courses and textbooks. The new addition to iBooks will bring the cost of many texts down to $14.99, versus the $75 plus for an average textbook (and, as a parent of a college freshman, I’ve already paid over $200 for a single book!). The new designs on textbooks will provide integrated and seamless technology, allowing students not only to read information, but also the opportunity to view videos, link to websites, and chat (apparently) about the concepts.

For those luddites who don’t quite see how technology can foster learning, we are only now starting to see a true representation of the potential of web-based technologies in opening up college opportunity for the masses. In the history of US higher education, there are certain events that truly massified higher education. First was the Morrill Act of 1962 (land grant institutions). Second was the Morrill Act II (HBCUs and other institutions). Third was the GI Bill (1944). Fourth was the Pell Grant (BEOG; 1972). Perhaps this is the Fifth Wave of serious revolution in higher education.

If we ever believed that the private and protected doors of higher education could be broken down, these new efforts by MIT and Apple have the greatest opportunity to do so. But only if legislation and public policy follows swiftly to ensure that we have articulation agreements to allow for a more open acceptance of courses and degrees.

Tony Carnevale, Ban Cheah, and Jeff Strohl’s new publication: HardTimes: College Majors, Unemployment and Earnings, states that unemployment for new BA graduates is “an unacceptable 8.9 percent,” acknowledging that it is an even worse 22.9 percent for recent high school graduates. Their publication showcases the reality that different BA degrees have different unemployment rates, with Architecture among the worst (13.9 percent) and Law and Public Policy among the best (8.1) percent.

But why the high (relatively) unemployment rates for recent graduates?

Here are my four non-empirical suggestions (because I don’t have the data just yet, but will for my upcoming book on this subject):

We produce too many of them. I disagree with Carnevale et al. saying we need more. We don’t. We have plenty. We have so many that we have an 8.9 percent unemployment rate. We don’t’ need more. We need better. If the graduates were of a higher quality, I guarantee that figure would be lower. I’ll bet you $10,000. I think we need more “better,” but not just more.

We produce too many in fields that don’t require more graduates. We have almost no fortifications against over production of graduates in most fields. Believe it or not, we have too many teachers, but not enough that stick around, so we “over produce” because we are so inefficient in our capacity to train personnel and keep them in their jobs. Quite pathetic, actually.

We do not match the skills from a particular BA to the job market. Just because we require a BA doesn’t mean we have matched the skill sets. In fact, with the exception of professional fields (etc., law, accounting, medicine, other health care), we haven’t done this at all. This is almost humorous if it weren’t so brutal. We create degrees; but we don’t truly consider the skill sets we are honing for the job market. This is America’s Achilles Heel and why our higher education system is falling behind: quickly.

Students are graduating with low skill sets and many are basically unemployable. The truth hurts. Many of our graduates did everything they were asked, but forgot to learn along the way. Jumped hoops, paid bills, went to class. But didn’t learn. Didn’t grow. They essentially “did time.” We call it college. Perhaps it is a type of jail, where students are not only watching their debt grow, but also their opportunity cost. I don’t blame students (necessarily): we set them up for this. We have extraordinarily low expectations for them, and our colleges (the truth still hurts) lower the bar because it would hurt them if they have more dropouts. We talk about passing students along in grade school to get rid of them; we do the same in higher education. We just do not like to admit to it because we are “better than K-12.” Nope. I beg to differ.

There are more reasons, but I’m going to start off the New Year with these.